There are many myths about estate planning, probably because it’s something most people don’t like to thing about that much. We’ve taken the top 10 estate planning myths that could prove detrimental to your family and will tell you why they’re not true; here are the second 5:
You don’t need a lawyer to create an estate plan. A Consumer Reports investigation found that online resources to draft wills and other estate planning documents usually don’t work well for most people. This is because everyone’s situation is different, and most online services don’t take this into account. To create an effective Florida estate plan, you should consult with a Florida estate planning attorney.
You have to use a trust to avoid probate. While trusts are a great way to avoid the time and expense of probate and keep your financial information private, there are other ways to avoid probate. For retirement accounts, annuities, life insurance and bank accounts, you can avoid probate by listing beneficiaries for each account. Florida allows you to add a payable-on-death designation to bank accounts and CDs and a transfer-on-death registration for securities. Florida does not allow for transfer-on-death deeds for real estate or a transfer-on-death registration for vehicles. For real estate, there is a deed known as a “Lady Bird Deed” that functions like a transfer-on-death deed and is available for Florida residents.
Trusts avoid estate tax. Certain trusts can be used to reduce or even eliminate estate tax liability, but all trusts in and of themselves do not automatically provide protection against estate taxes.
My estate is too small to worry about. That may be true when it comes to estate taxes since the current estate tax exemption is $5.49 million for individuals and $10.98 for married couples. However, estate planning is about much more than protection against taxes — an estate plan also provides protection for you in the event of your incapacitation, allowing you to name people to make financial and healthcare decisions for you.
Gift taxes are due on gifts to anyone over $14,000. Gifts to anyone over $14,000 simply reduce your lifetime gift and estate tax exclusion amount ($5.49 million in 2017). You will only owe gift taxes once you exceed the entire exclusion amount. You still have to file a gift tax return so the IRS (and you) can keep track.
If you’d like to learn more about how we can help you with your long-term care and Medicaid planning, please contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.